CPPIB to acquire Saskatchewan farmland portfolio

Euan Rocha, Rod Nickel

3 Min Read

TORONTO/WINNIPEG (Reuters) - The Canada Pension Plan Investment Board said on Thursday it has agreed to acquire the assets of Assiniboia Farmland, a fund that owns and manages a large portfolio of farmland in Saskatchewan, for about C$128 million.

CPPIB said Assiniboia’s diversified portfolio consists of about 115,000 acres of farmland that produce crops including wheat, barley and canola.

Sovereign wealth funds and large pension funds like Canada’s CPPIB, seeking long-life revenue generating assets, are making a number of big bets in physical assets like farmland and forests, along with investments in ports, hydro-electric power projects and other such assets.

Last year, CPPIB launched its agriculture investment program which will initially focus on farmland opportunities in Canada, the United States, Australia, New Zealand and Brazil.

“Farmland investments align well with CPPIB’s long-term investment strategy while further diversifying our portfolio,” said André Bourbonnais, CPPIB’s head of private investments, in a statement.

Canadian farmland values have risen steadily over the past decade, with the average value jumping 10 percent during the second half of 2012, according to the latest data from Farm Credit Canada (FCC), the country’s biggest agricultural lender.

The jump was the largest half-year increase measured by FCC since it began reporting on farmland values in 1985, coming the same year that U.S. corn prices rocketed to an all-time high.

Population growth in developing countries like China and India, and a move to higher-protein diets, have boosted demand prospects for grains and oilseeds. <GRO/CA>

“Farmland is an attractive asset class that has historically delivered stable, risk-adjusted returns and the global outlook for agriculture in general is positive due to increasing demand for agricultural products,” said Bourbonnais.

Western Canada this year produced the region’s biggest-ever wheat and canola crops, and Saskatchewan is the largest provincial grower of both. Canada is usually the world’s second- or third-largest wheat exporter and the biggest canola shipper.